Challenge the dollar, and the battlefield finds you

The US-Venezuela conflict is based not on the check cashing story of democracy or narco-terrorism but on the great-power competition. Venezuela holds the highest proven oil deposits in the world, with a reserve of about 303 billion barrels, or about 17 per cent of world reserves, far surpassing Saudi Arabia as well as more than five times the reserves of the United States. However, with this gift, its production has collapsed to fewer than 1 million barrels per day or about 0.8 per cent of world production, because of decades of mismanagement, corruption, sanctions and under-investment. This is the paradox of the situation- a massive potential with minimal output, that highlights the reasons why Venezuela is an attractive target and a thorn in the flesh of world powers. In the terms of international security, Venezuela has emerged to be a platform of resources in which energy, minerals, and finance intersect to create a special form of geopolitical calculus.

In my opinion, the crisis involving Venezuela, such as the allegations of the US attacking Maduro is a classic example of hybrid coercion and great power assertion. It is quite similar to the Power Transition Theory that posits that the threat of conflict escalates when emerging powers are likely to change the status quo. The case of Venezuela is not a military threat in the traditional sense, but its alliance with China and Russia alongside its noncompliance with the Petrodollar system is a structural threat to the US hegemony. The oil reserves of the country are massive, but technically they are of lower quality, and it is not possible to justify with the help of conventional energy the risks of the open conflict. 

The combination of oil and rare earths and other critical minerals has the real strategic value. Orinoco Mining Arc is an area of approximately 111,843 km2 (12 per cent of the Venezuelan territory) that has gold, bauxite, coltan, diamonds, nickel, and potential rare earths estimated to be worth billions of dollars. Outside the Arc, Venezuela has a strategic location being the entrance to the wider Andean belt – rare earth metals rich mountain range making the backbone of South America. The belt comprised of countries like Colombia, Ecuador and Peru with Venezuela (a gateway) – one of the richest mineral corridors in the Western Hemisphere. In the light of the Power Transition Theory, these resources are a potential platform on which emerging forces, such as China and Russia, can win or gain long-term industrial and technological advantages, whereas the established power, the United States, has great motivations to avoid the change of structural balance. Through this context, it is possible to realize that oil could be the apparent reward, but minerals, rare earths and strategic chokepoints are the real stakes. 

That layer of strategic calculus covered by the narrative of narco-terrorism is the justification layer. The United States positions the leadership of Venezuela as a criminal outfit and an accomplice in transnational trafficking networks- the same way the leadership of Noriega, Saddam Hussein and Gaddafi were delegitimized before toppling the regime. The US-led economic order has traditionally criminalized, isolated, and eliminated those leaders who challenge this economic order or disrupt control over the resources. In the case with Maduro, selling oil in Chinese Yuan and avoiding the use of the dollar was a direct threat to the Petrodollar system, which had been the foundation of the American global economic hegemony over the past five decades. The fact that Venezuela was seeking alternative currencies and bilateral deals with China and Russia was not just an economic game but also a geostrategic threat to US hegemony in monetary affairs which only increased the perceived urgency of coercive action. 

READ: Large part of Maduro’s security team was killed in US military operation, says Venezuela’s defence chief

The petrodollar system is not a mere currency system but it is a system of power. The dominance in the course of oil flow is equal to the dominance in the veins of the world economy. The challenge mounted by Maduro was related thus not as a domestic political issue but as a challenge to the American economic hegemony. The US reaction, as a counter-narco or anti-corruption strategy, is in line with history: leaders threatening the status quo are criminalized, marginalized, and ultimately eliminated usually in the guise of legality or ethical necessity. 

However, the Venezuelan government has demonstrated outstanding flexibility and durability, proving that even in case of severe pressure through coercive means, resource-abundant states can still be able to ensure strategic independence. Caracas has learned to: Avoid payments with prohibited payment and trade networks; Be non-dollar based and avoid being completely absorbed into the US financial system; Maintain exercise control as economic survival leveraging informal networks; Do not become an obedient state towards China and Russia. Such hybrid-resilience shows one important fact: sanctions will not force people to obey, but it is possible to understand why the US can move to more direct interventions. On a more generalized understanding, Venezuela is a symbol of contemporary hybrid survival and this represents a case of strategic resource management and nimbleness in the face of multipolarity. 

In my perspective, de-moralising the language of democracy or narco-terror, the most basic engines of the confrontation between the US and Venezuela are the ownership of resources, finance, and geopolitical space. It has been observed that states that are resourceful and do not yield to the hegemony are coerced or their regime altered irrespective of the ideology. The weapons have changed today; it is now intelligence networks, operating within hybrid warfare, sanctions, and targeted missions but the logic behind it is the same, oil, gold, and strategic minerals are the final currency, and survival is the game. The case of Venezuela is also a good example of the overlaps of energy and monetary power. The country put pressure on the Petrodollar by threatening to divert the international capital flows and provided a channel of de-dollarisation a trend that is currently evident in the Saudi hedging towards the east and the multiple polarity push by the BRICS. The opposition of Maduro to the dollar system, as well as the fact that Venezuela is at the entrance to the Andean belt in terms of resources, proves why the US is ready to give preferential treatment to its energy companies, regardless of the deteriorating quality of oil. 

Practically, the conflict is not over immediate output, but over positioning in a wider strategic competition of supremacy of resources. Venezuela is an emerging regional trouble. Its correlation with other powers, its incorporation into financial systems other than the dollar, its strategic resources altogether pose a threat of shifting the structural order in the Western Hemisphere. Conflict i.e. in terms of custody activity, escalation of sanctions, or the signaling of strategies is not then an exception, but a long-run mechanism by which the sitting power aims to ensure the acquisition of key resources whilst remaining on the top of things. Simply put, it is not about Maduro, or even oil per se. It is also geopolitics on the very basic level with resources as the currency of existence and possession of resources as the ultimate power.

OPINION: The unjustifiable war in Gaza

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.